Dreamvar Continued: Changes Made To The Law Society Code For Completion By Post

As of 1 May 2019, a new Code for Completion by Posthas been implemented by the Law Society in light of last year's decision inDreamvar (UK) Ltd v Mishcon de Reya and P&P Property Ltd v Owen White & Catlin LLP.

To recap, in its decision the Court of Appeal declined to allow any of the solicitors involved in the transaction relief from liability under Section 61 of the Trustee Act 1925. The vendor's solicitor who pays away the purchase monies for a transaction which is a nullity will be in breach of trust, even where the purchaser's solicitors are also so liable. The apportionment of such liability is to be resolved by contribution proceedings between the two sets of solicitors.

The vendor's solicitor will also usually warrant it has authority to act on behalf of the actual vendor and will incur liability for breach of such warranty if it is relied upon. The Law Society's amendments to the Code are designed to reflect this decision, and to "provide innocent purchasers with greater protection from fraudsters". The Code does not place any further onus or responsibility on the seller's solicitors, nor does it alter the seller's solicitors' obligation to verify their client's identity. However:-

(i) The Code recognises that the seller's solicitors are in the best position to satisfy themselves that the person instructing them is the genuine seller who is entitled to sell the property;

(ii) The Code defines "Seller" as "the person...who will be at the point of completion entitled to convey the legal and/or equitable title to the property";

(iii) The Code makes it explicit that the Seller's Solicitor holds any purchase money on...